What's in the MAI?

In sum, the MAI would require countries to open their economies wide to any interested investor, and TNC complaints about unfavourable treatment by the host country would be judged in unaccountable international courts. The main elements of the agreement are as follows:

The MAI would encompass an extremely broad range of investments.
Not only direct corporate investment, but stocks, bonds, loans, debt shares, intellectual property rights, leases, mortgages and concessions on land and natural resources would be covered. The health, education, communications, cultural, banking and construction sectors would all be fair game for foreign investors; in fact, the only exempted sectors would be defense and police.

The MAI is based on the principles of national treatment and most favoured nation (MFN).
In plain language, this would require governments to treat foreign investors as well or better than domestic investors, and thus would automatically favour transnational investment over that of smaller, domestic companies. Restrictions placed by countries on foreign investment in sensitive sectors -- for example publishing in Malaysia, Indonesia and Venezuela, forestry, fishing, mining and agriculture in a number of countries, as well as toxic waste in Colombia and highly polluting industry in Taiwan -- would be prohibited.

The MAI would do away with so-called performance requirements, measures designed to protect workers and communities.
For example, government requirements for a minimum number of local people being employed in a foreign firm, the use of a certain percentage of domestic products, technology transfer and so forth would become illegal under the MAI.

The MAI would ban restrictions on the excessive flow of capital in and out of countries.
Thereby it would increase speculative short-term investments of the type that caused the 1994 Mexican peso crisis and recent stock market crashes in Southeast Asia.

Unlike other multilateral treaties, the MAI would include a dispute settlement mechanism to allow investors to sue national and local governments for expropriation.
This mechanism, which grants powerful TNCs the right to challenge local and national legislation emerging from democratic political processes, is an extremely dangerous political precedent. A ruling of expropriation, which the MAI defines not only as loss of income but also of reputation, requires states to financially compensate the investor and/or to reform laws. The arbitration panel would consist of a few trade experts working behind closed doors, beyond public scrutiny. The ramifications of this provision upon national environmental, health and safety regulations are enormous, as exhibited by an ongoing case under the NAFTA in which the US Ethyl company is suing the Canadian government for US$ 250 million, claiming lost profits and reputation due to the banning of a toxic gasoline additive.

The MAI would in effect lock signatory countries into the agreement for a 20 year period.
A country can withdraw from the MAI only after five years, and companies investing in that country are covered under treaty provisions for an additional 15 years.

The MAI also includes the dangerous provisions of standstill and roll-back.
Standstill prohibits signatory countries from introducing new laws or policies which contradict the MAI -- this would have a crippling effect on national environmental and social policy. Roll-back is the procedure by which countries will be forced to open up protected areas and remove laws considered in violation of the MAI. OECD countries have identified 1000 pages of exemptions which would eventually have to be rolled back -- ranging from Austria's exemption of its chimney sweeping industry to social services in the United States.

The provisions of the MAI would contradict several international agreements signed by governments.
These include the Climate Convention and its Kyoto Protocol and the Convention on Biological Diversity.

The MAI will be a freestanding international treaty, open to accession by non-OECD countries.
This means that countries can sign on a take-it-or-leave-it basis, only allowing time-limited reservations. At least 10 non-OECD countries have expressed interest in joining the MAI from the beginning, including Argentina, Brazil, Chile and most likely Hong Kong, Colombia and the three Baltic States: Estonia, Latvia and Lithuania. Also Egypt is expected to join. ⁶

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